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Paladin's Q3 uranium output dips 15%, CEO gets pay cut

TORONTO (miningweekly.com) – Paladin Energy, which produces uranium in Namibia and Malawi, on Monday said output slumped 15% to 1.24-million pounds in the quarter ended September compared with the previous three months, and that CEO John Borshoff agreed to a 25% pay cut to reduce costs.

The Toronto- and Sydney-listed company said it sold a record two-million pounds of yellowcake during the quarter, raking in $102.7-million.

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A combination of planned shutdowns and unscheduled remediation work at its Langer Heinrich mine in Namibia and its Kayelekera operation in Malawi were to blame for the production slump, Paladin said.

At Langer Heinrich, commissioning of the Stage 3 expansion impacted production, while ground movement prompted the company to take the packaging and drying plant and acid plant at Kayelekera off-line for remedial work, costing it six weeks of output.

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Langer Heinrich’s expansion is set to lift production from 3.7-million pounds to 5.2-million pounds yearly.

Paladin said it sold uranium for an average $51.33/lb as spot prices languished in the wake of the Japanese nuclear disaster in March.

“The persistent deterioration of the uranium spot price post-Fukushima is impacting financial returns and for this quarter has negatively affected average sales price by a further $5/lb from that forecasted internally,” said the Perth-based firm.

It added that weak uranium prices would “dramatically impact the supply growth outlook” for the nuclear fuel.

While countries such as Germany have announced plans to shut their nuclear power plants as a result of the radiation leaks at the Fukushima Daiichi plant, others have said they will proceed with their plans, albeit after safety reviews.

These include the countries with the biggest nuclear power plans: Russia, China and India.

Analysts have predicted a significant supply shortfall after an agreement between Russia and the US, where the former Soviet Union State sends warheads to the US for downblending into nuclear fuel for power stations, comes to an end in 2013.

PAY CUT

Paladin said Borshoff had “elected” to lower his salary by one-quarter for a period of 12 months.

According to the company’s 2011 annual report, Borshoff was to receive a total of some $2.5-million in remuneration for the year, including a $2-million base salary and a $231 000 cash bonus.

In 2010, he earned a total $1.68-million, implying a 48% pay hike before the reduction announced on Monday.

Paladin said the cut was part of the company’s previously announced cost-cutting programme.

Shares in the company fell 4% on the TSX as at 11:45 to trade at C$1.61. The stock has shed 62% over the past 12 months.